1976 (5) TMI 89 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Contravention of the declaration under Rule 27(2) of the Orissa Sales Tax Rules.
2. Jurisdiction of the Tribunal in remanding the appeal after holding no contravention.
3. Applicability of Article 286(1)(b) of the Constitution and Section 5 of the Central Sales Tax Act to sales to Japanese buyers.

Issue-wise Detailed Analysis:

1. Contravention of the declaration under Rule 27(2) of the Orissa Sales Tax Rules:

The primary issue was whether the assessee contravened the declaration given under Rule 27(2) by reselling goods outside the state. The Tribunal found that the sales to Japanese buyers were completed at Paradeep, within the State of Orissa, thus there was no contravention of the declaration. The Tribunal's finding was based on the terms of the contract, which indicated that the title and risk of the goods passed to the buyer at Paradeep. The High Court concurred with the Tribunal's finding, noting that the sales were indeed local sales within Orissa, as the property in the goods passed to the Japanese buyers at Paradeep. Therefore, the proviso to Section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted.

2. Jurisdiction of the Tribunal in remanding the appeal after holding no contravention:

The Tribunal, after holding that there was no contravention of the declarations, remanded the matter for re-verification of accounts to ascertain the correct figures. Both the revenue and the assessee were aggrieved by this order. The High Court did not specifically address the jurisdictional aspect of the Tribunal's remand order in detail, as the primary focus was on the findings related to the contravention of declarations and the applicability of sales tax.

3. Applicability of Article 286(1)(b) of the Constitution and Section 5 of the Central Sales Tax Act to sales to Japanese buyers:

The assessee contended that the sales to Japanese buyers were in the course of export and thus exempt from sales tax under Article 286(1)(b) of the Constitution and Section 5 of the Central Sales Tax Act. The High Court analyzed the terms of the contract and concluded that the sales were completed at Paradeep, but these sales occasioned the export of goods out of India. The Court referred to the Supreme Court's decision in Mod. Serajuddin v. State of Orissa, which clarified that sales in the course of export are exempt from state sales tax. The High Court held that the sales to Japanese buyers, though completed at Paradeep, were in the course of export and thus not exigible to Orissa sales tax.

Conclusion:

The High Court answered the referred questions as follows:

1. The Tribunal was correct in holding that there was no contravention of the declarations under Rule 27(2) and the proviso to Section 5(2)(A)(a)(ii) was not attracted.
2. The sales to Japanese buyers were covered by the embargo under Article 286(1)(b) of the Constitution read with Section 5 of the Central Sales Tax Act and were not exigible to Orissa sales tax.
3. The remaining question did not survive for answer due to the findings on the first two issues.

The High Court referenced the Supreme Court's decision in Mod. Serajuddin's case and the Orissa High Court's decision in Joharimal Gajananda's case to support its conclusions. The Court did not award any costs.